Notes on the energy improvement (i.e. boiler) project
The saga continues with a major change in direction as of February 7, 2024 School Board meeting followed by the budget hearing. It seems the school board has abandoned its initiative to proceed with the project on its own without getting approval of the townspeople by way of a vote. They now will proceed with a warrant article and there will be a vote on it at the annual meeting on March 7, 2024 at 6.00 PM at the Thornton Central School. See this panel for the dialog ===>>>
This means we will float a bond for $4,007,118 for 20-yrs and incur interest payments of $102,500 each year. It is unclear if there is principal associated with this or not. If not, then the question is whether there is a balloon payment due at the end and, if so, how we will pay for that. Note there will be a separate budget hearing on February 20, 2024 at 6.00 PM at the school to go over the details of this.
- What are the implications of the change? On the plus side, the interest rate for the loan is in the mid three percent rage (about 3.5%) whereas the interest rate on the lease payment was 5.59%. The difference in the interest rate will save well over $1,000,000 in interest payments over the 20-yrs. On the other hand, the lease payment included a “non-appropriation” clause meaning that every year the townspeople could have voted not to fund the lease and the lease would become null and void.
- What about the timeline? We were told that Siemens has, in writing, agreed to continue to honor the contract signed on January 4, 2024. This means that the purchase orders they placed and their timeline (which completes the work in 2024) remains in tact. This is good news.
- Are we getting a good deal? This is a big question the school board refuses to answer. Bob Hatcher, of TTG challenged the school board to go out for bids in the month we have before the annual meeting but the school board refused. Their counsel said that we might be liable for damages since we have a signed contract with Siemens. But this is factually incorrect as the Siemens contract became null and void when they failed to sign a leasing contract and we never signed an extension to the contract. Bottom line is we have a single-source bid and we have no idea if we’re getting a good deal or getting screwed.
Other happenings at the budget hearing
The revised school budget was presented and can be viewed HERE. The total budget increases by 4.13% and will add $0.44 to the tax rate, roughly two percent. A major cost savings it appears is in special ed, down $151,000 (about 15%). They were not specific about why, but it’s likely a special ed student has moved from the town or is no longer on an individualized education plan. Taking that savings away means the budget would have increased by 7.4%
This dialog is from the minutes of the February 7, 2024 school board meeting – you can read the full minutes here
Dan Rossner – Since we last met, we have been working with a number of banks doing due diligence on the project we proposed. What we’ve encountered is multiple banks having difficulty with increased regulatory compliance issues at the federal level. We are recommending that the board shift its strategy in terms of how to pay for the project. If the capital lease payment gets pulled entirely out of the operating budget and an individual warrant article, we would support the NH Municipal Bond in its July sale of a tax-exempt municipal bond. We’ve talked with SIEMENS about the shift and will be able to maintain the schedule of the work primarily happening this
summer. If you accept this shift to a bond warrant article, we will need 60% of voters to approve the article. The interest rate through the bond bank will certainly be lower. The bond bank projection is 3.5% vs 5.6% in a capital lease. It would be a net savings of $1,053,000 over the 20 years in interest. Would reduce the impact of the first year on the tax rate from $0.65 to $0.22, paying only interest on the first year.
Mark Fischler – If we put this on a warrant article, and it goes before the town, we need 60% of the vote, and if it passes, the budget will be less expensive than the current model.
Dan Rossner – That’s correct. The total cost will be reduced by $1,053,000, assuming the bond is 3.5% in July.
Mark Fischler – We all know the serious nature. Will the plan still come through the same amount of time?
Dan Rossner – If the article is approved at the March 7th District Meeting, they will maintain the schedule and do the work this summer as planned.
Tara DiSalvo – If it isn’t approved, what are the ramifications with SIEMENS, and are there alternatives?
Dan Rossner – If the project is denied, we can’t move forward. The board voted to move forward and had to sign a notice to proceed. Equipment has been ordered, and there would undoubtedly be some fees to cancel those purchase orders.
Matt Hesser – The total savings of interest costs is $1,053,000 over 20 years. In the 1st year alone, the interest portion is $230,000 or $0.44 on the tax rate reduction from the previous projection.
Mark Fischler – Some of us have seen the boiler urgency. Is it any different? Have problems gone away? Do we need a new boiler?
Jon Bownes – We need a whole energy plan. Yes, we need a boiler.
Mark Fischler – To answer the question, we need a new energy system.
Tara DiSalvo – Sees the benefits of going to a warrant article. Several people in town have asked that we do.
Matt McDermott – The pivot to the bond, the financial reasons, and the impact on the taxpayers is positive. The timeline not being impacted is positive, and the SAU has shared there have been alarms on the boiler 23 times since October 11th. The need certainly hasn’t changed. It’s getting greater, so we need to do this. We need a change in the infrastructure. It’s more than just a boiler and working with an organization guaranteeing energy savings. My opinion is to move forward.
Matt Hesser – Agrees with Matt McDermott. Supports the board going with a bond.
Joanne Marcott – We need the boiler. Came to work here in 1980 and retired in 2016. The boiler gave us nothing but trouble. Can remember kids wearing jackets because the boiler went down.
It does not help that the kids are sitting in their chairs with jackets and thinking about how cold they are.
Mark Fischler – As I said before, we should go to the town. It’s the right way to do this. We have the opportunity now, and the problem hasn’t gone away. It’s going to be cheaper and save the taxpayers money. Now, the town has the opportunity to be on the record and say, let’s put our kids first and ensure it’s a safe environment. I welcome that opportunity. This is good news.
Matt McDermott – Everything I said is for the kids, but we are also the biggest employer in town. It’s for them as well.
Kyla Welch – The other piece to consider is this has been used as a shelter. Right now, we can’t say that it’s a stable shelter and that we can provide the shelter that is needed in the case of an emergency. Have had to close school due to the boiler, keeping the water at the right temperature. It’s an energy issue. It’s larger than a boiler project. It’s an energy plan, re-outfitting the whole heating system. The community does use the building for a number of reasons.
On a motion by Mark Fischler, seconded by Matt Hesser, the board unanimously voted to move this to a bond and a warrant article to the town.
Kyla Welch – This will change our budget with the project going to a warrant article. The current budget has the lease. The project is moving to a warrant article. Copies were made, and the new budget and warrant articles were handed out.
there was a budget, I believe with a print date of 10/2021, which showed line items of $110,000 for Boiler and $80,000 for, again, I think, it was for winterization/weatherization/windows, etc., I cannot seem to locate that. Is it somewhere on the web site? It came in email format. Could it be posted or emailed to us?
Thank you.